Newell Brands Inc. (NWL) Earnings Call Transcript & Summary

Welcome, and thanks for joining us. I'm really excited to have Newell back to the conference. I'm super excited to have everybody here back to the conference in person. It's great to be here. And we're thrilled to have both Chief Executive Officer, Ravi Saligram, as well as President and Chief Financial Officer, Chris Peterson. We're going to use this whole session for interactive Q&A. Before we do that, Ravi will -- is going to give a Surgeon General's warning and then we'll get into it.

Yes, reluctant to do so. But let me give you the scintillating words about how today we'll be making forward-looking statements which involve risks and uncertainties. Actual results may differ materially. Please refer to the cautionary language and risk factors and our SEC filings for discussion of the factors affecting these statements. We'll also refer to certain non-GAAP financial measures. Explanations of these measures and available reconciliations to GAAP can be found on our IR website. Our securities counsel will now be happy. So I can hand it over to you.

Great. Let me just start super high level. a tremendous amount has transpired since -- well, since you and I first met in Hoboken several years ago, both inside Newell and around Newell. As you just reflect on all that's been -- all that's transpired, all that you've accomplished, just give us a sense for, I guess, what you're most proud of. And how the work you've done, the work you've done navigating the challenge of the pandemic potentially positions you for what may be a much more difficult macro and consumer demand backdrop as we go forward.

Great, Steve. Thank you for that. Look, I'd say we've gone through -- we started on a turnaround, COVID hit us. Then you had the social justice movement, supply chain issues, inflation and more recently Ukraine. And all of that, I'd say, has really strengthened us, creating a lot of resilience in the company and operational agility. And we've really learned, I think, how to maximize the value of our portfolio. And so I think that and become really nimble and learn to pivot and become an all-weather company, if you will. And in terms of some of the accomplishments, if you think about our journey, we've been declining on top line for a number of years. And we've really embarked on a very focused effort to polish up our iconic brands and rather than looking in the past, looking forward, to really using insights and foresights to sharpen our marketing prowess. Drove innovation quite a bit, and that has been a real great hallmark for us, all of which resulted in, if we look back, 7 quarters of growth. When we look at 2021, 12.5% core sales growth, organic growth for us. 12.4% normalized operating profit. In this most recent quarter, 6.9% growth on top of 21% last year, but also a 10.4% operating profit growth and 20% normalized EPS. So all of that says we are actually delivering financial results. And that, I think I'm very proud of our team for having done that. There are a few underlying things that have helped us. One, we went to a hybrid organizational model, where we empowered the BUs to really get very focused on the consumer and customer. But we said, look, we can't act like $7 billion-plus companies. We've really got to act like a $10 billion company, leverage our scale and speak with one voice to customers. So we've been unifying the back and that has really created some strong momentum for us, this thing about the front-facing for the BUs' unification on the back. We have also really driven complexity reduction, a lot of kudos to Chris on that. SKUs, 100,000-plus, down to 37,000. 400 websites down to 40. 46 ERPs down to 2 for the most part. So legal entities. You name it, we've really driven that complexity down. Our cash conversion cycle is down substantially, improving our cash flow. And we've reduced our debt. It was massive. We're now down to 3.0 at the end of 2021 net debt-to-EBITDA. One of the agencies put us as investment grade. So I think all of this, and now we're embarking actually from a turnaround to more of a transformation with the Ovid initiative, which is sort of historic. It's never happened in this company, 160 years, a lot of independents. And now we're taking 23 supply chains, integrating them into one. A lot of focus on automation and productivity. Our overheads have come down from like 18.5% to 16.5% at benchmark levels. Our employee engagement, which was at a pathetic 45% low, now a top company benchmark level of 75%. So no matter which way you look at it, the only place where we've got to make progress now, which is a lot of focus, is gross margins. But I think, all in all, I'm very proud of our teams and it's really the great leadership team that has driven these results. And I'm most proud of them.

Great. And Chris, maybe following up on that and thinking about picking up from where you finished the first quarter, just considerations over the balance of the year amidst cost inflation and uncertain demand environments and -- just I guess maybe just a little bit, from where you sit, what are the key things you're monitoring day-to-day? And what are the key success factors for the company over the year?

Yes. I think that the thing that we're thinking about, and Ravi touched on it, was remaining operationally agile and financially disciplined in an uncertain external environment. So last year, we came off of a year with 12.5% core sales growth. We finished the first quarter with 6.9% for sales growth, which was ahead of our expectations. We planned this year for a significant input cost inflation, 9%. The good news on that is that our input cost inflation this year is largely driven by ocean freight, by sourced finished goods and by wages. We have good visibility into each of those things. Our contracts for ocean freight are now determined through the balance of the year. Our contracts for sourced finished goods are now determined. And if anything, the RMB has gotten a little bit weaker versus the dollar. And our labor cost, we've made interventions there and we think we've got better visibility. We've put significant pricing into the market to compensate for the inflation pressure, and we're continuing to drive strong productivity programs. We think the pricing and the productivity that we've put into the market and that we're going to drive are more than going to compensate for the inflation pressure. So we're expecting operating margins to be up this year as pricing and productivity more than offset the inflation. And that pricing that we've put into the market largely has all been announced. It largely has all been enacted at this point. So it's not ahead of us. We are monitoring, the consumer health is probably the thing we're watching the closest as well as some retailers. In the second quarter, we had guided to low single-digit core sales growth on top of a very challenging period last year, a challenging comp last year of 25% core sales growth. When we issued the guidance, the guidance assumed that retailers were going to pull forward some consumer or some retailer orders to build inventory. I think with some of the retailer comments that have been made, it's less likely that, that will happen in Q2, but the underlying trends of how we're monitoring the business, what we're driving, I think, remain consistent.

Is that -- the less likelihood to order forward is -- I mean, that's clearly a reflection of where their inventory sit and where they're foreseeing demand. Is that also an indication that the supply chain in general is -- supply chain performance is improved because part of the rationale for ordering forward was that they were going to be concerned about having especially back-to-school items in time?

Yes. I would say a couple of things on that. The first one is our supply chain situation has improved markedly. So as we sit here today, our supply chain situation is the best it's been since COVID started. In other words, our fill rates are up. The number of products we have on allocation has come down. There are still some places where we have challenges. We have a Dymo business that is affected by the chip shortage. We have the Ball Jar business where the demand has accelerated that we're still on allocation. But in general, 80% of our business plus is now not on allocation and we're able to meet demand. The second thing I would say is that one of the things we monitor closely is retailer inventories. And this has been a discussion, I think, that's been in the press a lot recently. We feel good about our retailer inventory positions. We are not over-inventoried at retail. We're not under-inventoried at retail. We think we're in a good spot. But it doesn't mean that if a retailer is trying to reduce inventory, we may get caught up in a broad brush type of action, but we're not in a position where we think our retail inventories are somehow out of line with what we think is normal.

One of the things that we have thought for the pull forward a little bit in addition to back-to-school was really of Ovid, which goes on July, and that's maybe given their comments may be less likely.

Okay. So Ravi, maybe with that as a backdrop, just perhaps a health update from you across the major businesses. And there's a lot of them, so we're not going to have time to go through all of them. But just maybe differentiating between the growth businesses, Writing, Food, Home Fragrances versus some of the more continuous improvement businesses or works in progress and then in the middle of the value generation business. Just a state of health across the business and where your priorities are for the balance of the year.

Yes. I think maybe what I'll do is, just in the interest of time, rather than go through each, I'll talk about the businesses that are doing well and businesses that are challenged, maybe easier.

Perfect.

And it starts with the state of the consumer. Consumption is down this year. And I think it's -- we're really seeing that as the stimulus got pulled off, the consumer balance sheets have been affected. But on top of it, there is inflation. But choices, hey, is it gas, food or something else? So that clearly is putting a little damper. But the good news is the consumption is still way above, in fact, I think almost double digits versus 2019. So some residual effects of some of these trends. I think what we're seeing is back to offices, and while it's still hybrid, that has definitely been a tailwind for our commercial business. Our commercial business is very strong right now across many categories. And we're seeing with some of our major customers very strong growth across some of our top customers. So I think that is going to be a really strong business this year. Writing, Back-to-School is off to a very good start. Our shares are up. We're continuing the momentum on Writing. And so -- and I was just in the U.K. a few weeks ago, just to see the fantastic shares we have there. In France, obviously, our major competitor [indiscernible], not as developed here. But Writing on the whole, very, very happy with that, and that being our most profitable business, that is a real positive. The 2 businesses that are challenged are Home Fragrances. Huge comps last year and COVID really those trends help because people want [indiscernible], et cetera. With the back-to-office, that's -- the consumptions [indiscernible]. But there's another factor that's happening on Home Fragrance, which is we saw a lot of people with the stimulus, especially lower-income consumers, come into the category and purchasing. We've now, I think, lost them. So I think you're seeing some consumption go down. So that business this year is going to be a challenge. But the operational health of the business, the innovations we've got, all the work we are doing, not just in candles but in other types of fragrances, we think long-term, it's still going to be truly a growth business with high gross margins. Now the business that's softest is Home Appliances. I think, there, there was truly some consumer acceleration with the stimulus and these have longer purchase cycles. But there are some supply chain issues on some things like coffee makers, where there is demand, especially because we're opening price point, but we're not able to fulfill it. But overall, appliances, a bit soft. Though in some of the Latin American geographies, we still seem to be doing okay. So that would be the quick...

Is there -- you mentioned Latin America, is there -- is there -- are there sort of summary takeaways by geography in terms of differences that you're seeing in Europe versus the U.S. versus Latin America?

Yes. I think Latin America was very strong last year, continues to be strong. Mexico continues to have some strength for us. So Europe, like France, have been spending the last week here, touring stores, spending time with the teams. And really, we have a business called Mapa Spontex, Spontex [indiscernible]. Yesterday, I was at one of the [indiscernible] stores, the craft stores, and I was just amazed. 8-foot tiles of sponges, which I've never seen for anyone, even in the U.S. And we're the market leader here with like a 60 share. So just very strong businesses, Mapa Glove business. People, when they say gloves, they say MAPA. So France, I think a lot of potential here for us in the future. We're very excited. U.K., I think we've got lots of opportunity. And Germany, I think we've really -- while we have a sizable business there, I think there is -- we really need to be doing a lot better there. And so with now my new CEO of International has been joining me, Maria Fernanda, I think that -- we think that there's a lot of opportunity in Europe. And Japan, right now, our outdoor business is doing -- continues to do very well and that's our highest margin business. So I think geographically, we've got strength. Clearly, some parts of Europe affected by the war and stuff and consumer sentiment. U.K., the consumer sentiment is not so strong right now, I think, with inflation being as high as it is.

Okay. Last lens by which to slice a channel. E-commerce was a huge investment priority for you and definitely benefited during the pandemic. How is that performing as we recover and mobilization is -- mobility is back up? Just a little bit of perspective of high risk across channels.

Yes. It continues to be a great strength for us. We're doing extremely well with one of our top customers, with Amazon. We're continuing to do very well there, both in the U.S. and internationally. And now there has been a downshift in the last 6 months back to brick-and-mortar. So we've experienced some of that as well, though we continue to grow a lot with, so the Amazon and other pure plays. With really -- with the other retailers, brick-and-mortar retailers, we tend to look at it from an omni basis. Because right now, there are so many forms because you're seeing still the Click and Collect being quite prevalent. So we're focused on that. We're going to continue to make investment on e-commerce and omni channel because we think it's the way of the future. Our penetration levels at about 21% are so very strong. And we are thinking of really -- there are really 2 sides to it. There's e-commerce. Then there's whole the digital side. And the digital side, we're making tremendous quality investments on content, on ratings, reviews, on really data analytics and because we're putting a lot of modeling now in place for understanding consumption patterns, et cetera. So I think this is really enabling us to prepare for the future.

And Chris, just the ability for the business to continue to make those strategic investments amidst some of the cost and demand volatility we talked about. What's your confidence level there? Not just digital and data analytics, but you've been investing a lot in innovation, optimization, advertising and promotion optimization. Just a lot of money going back into the business. Just your -- just a health check on your confidence about that -- the ability for that to continue.

Yes. I think one of the things that we've said is that we are going to invest in the capabilities to try to transform this company into an operationally excellent company across the board. And so the places over the last couple of years that we've invested have been in creating the ability to do automation, creating the ability to go faster and connect with consumers more digitally. We've invested in engineering resources. We've invested in better consumer understanding. We've invested more in advertising. Our plan this year has our -- is expecting our advertising and promotion spending as a percent of sales to be higher this year than last year. And the way that we're funding that is really through complexity reduction and elimination of non-value-added work. The Ovid program is a good example. In Ovid, we're going from 23 unique supply chains in the U.S. down to a single integrated supply chain. We've been working on this project for the last 18 months it's all been self-funded. We haven't called it out as a separate expense, but we have invested behind that. We expect the savings from that project to start contributing next year in 2023 as we get fully into the new program. And so I think it's about looking at our cost from a 0 budget perspective, driving out non-value-added costs and then investing where we need to build capabilities and expand our operational advantage.

And one philosophy there, Steve, is we're very much on a pay-as-you-go rather than hockey stick models. And so a lot of -- we've been working very hard on our overhead efficiency and really pushing the business units as well as the center to eliminate duplication. That next level is going to be international, where we think we can get to more overhead efficiency. That helps us fund some of these new capabilities.

Yes. Is there -- I mean just different -- not to be pessimistic on the macro, but to the extent that the market is correct and we're going into tougher times, some of the levers we talked about to help fund those, whether it's Ovid or overhead, your ability to pull forward and expedite some of those productivity initiatives, just where does, number one? And then number two, as you mentioned upfront, there's been a tremendous amount of pricing, both list pricing and also revenue growth management initiatives that have enabled pricing. Just the runway on both those and especially on the pricing side, the puts and takes between more pricing if needed versus a weaker consumer and how you're weighing those functions -- those factors?

So I think the -- I'll start with the productivity side and then come back to the pricing side. On the productivity side, we've done a lot to make productivity a way of life in the organization. We've created this FUEL productivity initiative that really empowers the organization at all levels in the organization and our manufacturing plants and our distribution centers to come up with ideas and then it creates a process by which we drive ideas. So last year, for example, our FUEL productivity initiatives, we had over 2,000 initiatives that we drove as part of the program. And each of the last 2 years, that FUEL productivity initiative has taken out 4% of our cost of goods sold. And so we think that we've got a sustainable program. We've been targeting 3% to 4% per year of cost of goods sold takeout. It's been a little bit masked because of the inflation in the last 2 years. But we think, as we go forward, we're going to start to see the benefit of that. Ovid is a big component of that. Automation is a big component of that. We started with automation, created a very strong center team. We've now built resources in each of our business unit manufacturing facilities. Last year, we implemented automation that took out 1,000 jobs. This year, we're on track to do something similar. I think going forward, we can accelerate the pace of that. On automation, what we're seeing is that when we invest capital behind automation, we generally get a 30% or higher rate of return. So it's a very strong payback. and we're investing at pace to do that. So I think the productivity, the runway we've got ahead of us on productivity is still very significant. As part of Ovid, when we implement Project Ovid, we're expecting we're going to take 40% of the miles driven out of our U.S. transportation network. That's a big deal. We're going to be able to move our ocean freight from being 80% plus in the West Coast to being 50-50 between the West Coast and the East Coast, that gives us a lot more flexibility. On the pricing side, we're monitoring it. We generally operate with the market-leading brands and positions in the categories in which we compete. And as the market leader, all of the competitors are facing the same commodity and input cost pressure that we are, but we've been trying to lead pricing up, which is why we priced early. And as I said, our input cost forecast has been relatively stable the last 3 months. So we feel like on the input cost side, we've got better visibility. The pricing that we've put in place contemplated that. That pricing is now visible to competitors. And in most of the cases, the competition has followed. There are a few that were still watching. But we feel good about the retailer acceptance of that pricing, which has gone through. And we generally feel good about the competitors following the pricing. But we're going to continue to monitoring it. Certainly, the low-income consumer, we expect to be under increasing pressure as the stimulus dollars roll off. Our guidance for this year contemplated that. We guided for a more modest top line growth this year, coming off of the 12.5% last year. Within our guidance, we were expecting high single-digit pricing which we have very good visibility to. And we also planned for volume to be down mid-single digits because of some price elasticity and some of the categories normalizing from the COVID peak last year.

What about all-in costs? So raw material input costs relatively stable. We think about labor and the overall freight backdrop, conversion costs with third-party suppliers. Is the overall expense structure also stable? Or are you seeing inflation beyond raw materials?

Yes. I would say we may be a little unique in this regard in that we are more stable in our cost structure than most. And let me walk through it. Our biggest driver of inflation this year is ocean freight. Our ocean freight contracts get struck and run from May 1 to May 1. Those contracts we negotiated with all of the ocean carriers in April and they're now set for the next 12 months. So we've got very good visibility at this point in the year to what's going to happen for the next 12 months at our contract rates, which is where the vast majority of our freight moves. On our labor, we made a choice at the end of last year, because we were expecting a labor shortage, to significantly improve the compensation because we wanted to reduce our turnover and make sure our facilities were fully staffed. And so we raised wages at our facilities on average about $4 an hour, which is meaningful, maybe 20% wage increase. And we went to a situation where we're paying above -- slightly above the market to lock in our labor force. We've seen our attrition rate dropped dramatically. We believe we're -- we remain competitive. We think we're in good shape on that. And then sourced finished goods is the other one where I think about 9 months ago, the Chinese currency had strengthened, the RMB had strengthened versus the U.S. dollar. And we got a significant number of cost increases from our sourced finished goods suppliers. Over the last -- since we've done those negotiations, if anything, the dollar has strengthened versus the RMB. So I think our costs are relatively in good shape there, and I don't expect there to be a meaningful move unless there's a dramatic move in the RMB the other way. Commodity costs for us are less of a driver this year. We're seeing resin costs if anything roll over. Resin costs this month are lower than they've been in the last few months. And on transportation, it's interesting. Transportation in the U.S., about 30%. A rule of thumb we use is about 30% of the transportation cost is related to diesel fuel. 70% is capacity. And if you look at that, the diesel fuel element is going up with fuel prices, but the capacity piece is coming down. And so those 2 are basically offsetting each other is what we're seeing at the moment.

As Ravi mentioned, leverage is back down to a level where you're happy about it. As you think about capital allocation priorities from here, maybe just a little insight as how you are thinking about it? And to what extent portfolio optimization, portfolio construction is a priority within that? That would be helpful.

Yes. So we expect to continue to be a strong operating cash flow driver. We've taken our cash conversion cycle from 115 days in 2018, down to 72 days at the end of last year. And we've set a target of getting to 50 days over the next few years. With that operating cash flow, first priority for capital is to reinvest back into the business. Generally, I'm looking for about a 30% rate of return on capital investments in the business because I want to try to drive cash efficiency and drive the company's cash efficiency ratio higher over time. And we're seeing plenty of opportunity to invest at that level and things like automation, as I mentioned previously. That generally puts us at a CapEx ratio of about 3% of revenue, something in that range. Beyond that, we pay a very healthy dividend. We expect to maintain that dividend. And the dividend payout ratio was a little bit higher than normal. What we've said, and we've been consistent on, is that we expect our dividend in absolute terms to remain the same. And we expect to grow back into it from a payout ratio standpoint. We've been doing that over the last couple of years. I think our payout ratio has dropped 10 or 15 points as our EPS has grown and we've maintained our dividend. And then beyond that, we're expecting to generate excess cash beyond that. And for that, we're now at a point, with our debt being reduced, where we'll look at either share repurchase as a way to return cash to shareholders or tuck-in acquisitions. And tuck-in acquisitions, our bar is very high. We're not looking for large-scale acquisitions. And we would only do a tuck-in acquisition if it was very strategic, a clear shareholder value creation winner and something that made a very strong strategic sense for us. On the portfolio composition side, I think the large-scale divestitures that the company has done over the last couple of years are behind us. I think we've rightsized the company's debt portfolio. I think we have a portfolio that fits together well. It doesn't mean that we won't look for opportunities and constantly reevaluate and be shareholder value creation driven, but there's not an impetus for us to do something because we see very strong opportunity to drive shareholder value with each of the business units that we have today over the next 3 to 5 years.

And maybe I should have asked this earlier, but just there is an evergreen target that Newell has. And as we talked about, the company has gone through a lot of change. So that evergreen model has not really been tested through economic cycles. How should investors think about the durability of the evergreen target if we are to go into a more difficult consumer demand environment? There's a lot of things that you have -- a lot of individual levers that you have that are kind of idiosyncratic where Newell stands today. But if the world gets tougher, just what's the durability of that evergreen model in -- at a high level?

Yes. So I think we've said from an evergreen model that we're shooting for low single-digit core sales growth, 50 basis points on average per year of operating margin improvement and free cash flow of about 100% of our net income on an annual basis. We've also said when we put the evergreen model out that it's likely not going to be that every single year. There's going to be some years where we're above and some years we're below. We think that's an average that we'll shoot for over time. For example, last year, we did 12.5% core sales growth. This year, we're guiding for stronger than 50 basis points of operating margin expansion. I think a lot of what's in the evergreen model is in our control. So when you look at things that we're driving on automation, on the Ovid project, on the productivity initiatives, a lot of that we can drive regardless of the economic cycle. So I think there are big elements of what we're trying to do, the better consumer understanding, the innovation that are going to be helpful for us in any economic cycle. We certainly are not immune to economic cycles. And I think we've proven over the last 2 years or 3 years that we're pretty good at being operationally agile and navigating different parts of the cycle. And so we're very focused on that and trying to make sure that we're really leveraging the power of the portfolio and investing in businesses at the right time to capitalize on trends. And as Ravi mentioned earlier, we expect Writing and Commercial to have a very strong year this year, and we're investing disproportionately behind those businesses this year. On the other hand, we expect Home Appliances and Home Fragrances to be more normalizing businesses. And so that part of this power of the portfolio that we're managing, I think, can help us through different parts of the economic cycle.

I think the evergreen model is just a reflection of our business model. And when we put that out, it is not saying, "Hey, we'll be fair-weather friends. If everything is going well, we'll do it. If things are not going well, we can't." That's not the way we look at it. I think a lot of the capability building we're doing, and we're very judicious about it, is really to help us through different cycles. We invested in revenue growth management, came in handy. Then we had to drive price increases. We'll put a new innovation operating model. And one of the big focus areas that is new products that are gross margin accretive. And so -- and the power of our portfolio cannot be underestimated. Because sometimes people are deluded by this collection of business, say, what's the connection? Well, I think when one goes up, another comes down; or when one goes down, another comes up, we're able to make it work. And we demonstrated that last year, this quarter, I think we're going to continue to demonstrate it. We've got -- I think we've addressed the fundamentals. And in the CPG business, when you have strong brands, strong innovation, you'll get -- we don't need to have huge growth, but modest growth, I think, even in a difficult time because we're going to put a lot of focus on consumer value. And not everything in our portfolio is discretionary, which is another important point.

So in order to do that, the organization to remain operationally agile, to be able to benefit from one business going up, being the another one suffering, it requires a lot of real-time decision-making. And you've invested a lot in people as well, not only sort of at the front line, but you brought on a tremendous -- like a whole new executive leadership team essentially. You run -- as you mentioned, you run a multitude of different businesses, but you've also tried to create a One Newell culture. Can you just give us a little bit of insight as to how that works practically behind the scenes? How decision-making is made so that you are able to deliver operational ability, as Chris mentioned?

The starting point is we pick people who are all team players. And #1 thing I've looked for is collaboration. Second, our philosophy, which is one for all, all for one. People may be running separate business units, but it's the total company performance that matters. We put incentive systems that reinforce that. 50% of our short-term incentive is corporate, 50% for the BU. So it's equally matched. And so some years, if BU suffers because of macro, they get picked up by the corporate. So I think this all for one, one for all, helps a lot. It's a very cohesive team. Intense communication, we run -- we have a very disciplined operating review process. Every month, we go through every business and sub-business and different levels. So we are constant and we are very metric driven, both financial and operational metrics. So with the operational metrics, we're able to gauge the health of the business. And we're constantly pivoting. So if you start seeing, hey, this classic example, we classified Home Fragrance as a growth business which long term it is. This year, it's not doing well. So immediately, we say, okay, we're going to divert some A&P from you to another business, to Writing, example. And the Head of Home Fragrance understands that. And because the incentive system doesn't disincentivize them. So this -- and we are very much in the field. I spent a lot of time with customers, in the stores, in geographies so that we're not into the Ivory tower syndrome. And that's what helps us pivot very fast. And I think that's -- and our teams are constantly talking to each other. And we go not just at the top, but we use our top 150 very, very much to drive decisions. So that, I think it's -- for a company that's $10 billion, this way, we act very smart. We're very fast and very, very nimble and no bureaucracy. So quick decision-making. And people write to us, we immediately respond. And so I think that has been -- because it's all about execution, because we have the framework, we never deviate. Boom, boom, boom, execute.

Great. I think we're just about out of time, so we're going to leave it on that note, which I think is a good note to leave it on. We look forward to watching you execute over the next 12 months and, hopefully, welcome you back here next June. Thanks so much.

Thank you so much.

Appreciate it.